Starting January 2025, certain Australian companies and asset owners, as indicated under “Who Must Report and When”, will be required to disclose climate-related financial information under the newly established Australian Sustainability Reporting Standards (ASRS), issued by the Australian Accounting Standards Board (AASB).
What are the Australian Sustainability Reporting Standards (ASRS)?
ASRS represents Australia’s formal adoption of the global IFRS Sustainability Disclosure Standards (SDS) and is designed to enhance transparency, accountability, and integration of climate-related risks into financial reporting.
The ASRS includes:
- Voluntary standards under AASB S1 (general sustainability-related disclosures)
- Mandatory standards under AASB S2 (climate-related financial disclosures)
Why Is Mandatory ASRS Being Introduced?
Climate change poses a significant financial risk, threatening physical assets through events like floods and bushfires, and disrupting supply chains and infrastructure. These impacts affect businesses and the broader economy. The ASRS aim to help companies identify, assess, and manage climate-related financial risks and opportunities. This supports both resilience planning and the transition to net zero.
Compliance with ASRS is essential. Failure to comply can result in serious financial, legal, and reputational consequences. Early preparation and proactive engagement are key to meeting obligations and minimizing risk.
Mandatory Climate Disclosures
Under ASRS, businesses must report on the following areas:
- Climate-related risks, opportunities and financial impacts
- Scenario analysis
- Greenhouse gas (GHG) emissions (Scope 1, 2, and 3)
Disclosures must be aligned with four key pillars:
- Governance:
Explain the processes, controls, and oversight mechanisms used to monitor and manage climate-related risks and opportunities, including roles and responsibilities of key personnel.
- Strategy:
Describe the business’s approach to climate-related risks and opportunities, including transition plans, emissions targets, use of offsets, and mitigation strategies across short-, medium-, and long-term time horizons. Climate scenario analysis is also expected.
- Risk Management:
Detail how climate-related risks and opportunities are identified, assessed, prioritized, and monitored, including how these processes are integrated into the company’s overall risk management framework.
- Metrics and Targets:
Disclose relevant climate metrics and targets, including GHG emissions across Scope 1 (direct), Scope 2 (indirect from energy use), and Scope 3 (all other indirect emissions).
For full reporting details, refer to the official AASB S2 guidance here:
AASB S2 – Climate-related Financial Disclosures